Saks Global boosts liquidity, securing $600 million in financing
Saks Global has strengthened its balance sheet with a new round of financing.
The luxury retailer said that it has secured $600 million in financing commitments from a majority of its existing bondholders. The two-part transaction includes a $400 million first-in, last-out (FILO) asset-based credit facility, with $300 million funded immediately and an additional $100 million to be funded upon completion of a bond exchange.
The transaction also includes $200 million in additional commitments subject to the satisfaction of certain conditions. A majority of bondholders have committed to participate in the exchange, which will launch in the near term.
As reported by Bloomberg, creditors will have to exchange their current promissory notes for new debt instruments of lower priority, but they will maintain the same interest rate. Those who do not participate may lose protection in the event of default.
The deal should should help ease concerns among bondholders and vendors that Saks Global, which has a $4 billion debt load, would not be able to sustain its operations, reported WWD. Last December, Hudson’s Bay Company acquired Neiman Marcus for $2.7 billion. The transaction resulted in the creation of a new company called Saks Global.
In a release, Saks Global CEO Marc Metric said the transaction “reflects the outcome of productive engagement with our bondholders and their continued confidence in our business and strategic direction.”
“This comprehensive financing package meaningfully enhances our liquidity and strengthens our balance sheet,” he said, “Coupled with the early realization of synergies and improving inventory position, we are primed to execute on our transformation strategy, invest in key growth initiatives, and reinforce our leadership as the world's largest multi-brand luxury retailer."
Saks said it would be entering into this transaction in lieu of the financing commitments it announced last month with SLR Credit Solutions. Previously, the company had said it secured $350 million of financing commitments from SLR, consisting of a $300 million FILO facility.
Saks Global’s portfolio includes Neiman Marcus, Bergdorf Goodman, Saks Fifth Avenue and Saks Off 5th, as well as a portfolio of prime U.S. real estate holdings and investments.
Advisors
PJT Partners and BofA Securities, Inc. are serving as financial advisors to Saks Global in connection with the transaction. Willkie Farr & Gallagher LLP and Kirkland & Ellis LLP are serving as legal counsel to Saks Global.
